Market Outlook 27th July 2010

Strong & Weak Stocks

This is list of 10 strong stocks: 

Titan, Bharti Airtel, UCO Bank, Sintex, Allahabad Bank, Idea, Crompton Greaves, TCS, Cairn India & PTC.  

And this is list of 10 Weak Stocks: 

Maruti, RNRL, Hero Honda, TV-18, Indian Bank, Dr Reddy, FSL, KS Oils, Praj Ind & Finance Tech.

The daily trend of nifty is in Uptrend 

Supp / Resis spot/ cash levels for intraday today Indices Supp/Resis 1 2 3 Nifty Resistance 5453.50 5488.40 5510.55 Support 5396.45 5374.30 5339.40 Sensex Resistance 18144.80 18269.55 18345.01 Support 17944.59 17869.13 17744.38
SPOT/ CASH LEVELS FOR INTRADAY TRADING Company Name  Exchange LTP* R1 #1 S1 @1 R2 #2 S2 @2 R3 #3 S3 @3 Allahabad Bank NSE 184.55 186.87 182.32 189.18 180.08 191.42 177.77 Bank of India NSE 393.85 402.70 388.10 411.55 382.35 417.30 373.50 Bank of Rajasthan Ltd. NSE 179.45 181.23 178.33 183.02 177.22 184.13 175.43 Banking Index Benchmark Exchange Traded Scheme (Bank BeES) NSE 1010.00 1014.98 1005.03 1019.97 1000.07 1024.93 995.08 Bharti Airtel Ltd. NSE 320.40 324.95 312.75 329.50 305.10 337.15 300.55 Cairn India Ltd. NSE 331.25 334.05 328.25 336.85 325.25 339.85 322.45 Crompton Greaves Ltd. NSE 283.75 290.17 279.67 296.58 275.58 300.67 269.17 Firstsource Solutions Ltd. NSE 26.05 26.90 25.55 27.75 25.05 28.25 24.20 Hero Honda Motors Ltd. NSE 1804.30 1914.87 1743.87 2025.43 1683.43 2085.87 1572.87 Idea Cellular Ltd. NSE 67.55 68.75 66.70 69.95 65.85 70.80 64.65 Indian Bank NSE 221.75 243.32 204.87 264.88 187.98 281.77 166.42 Indian Hotels Company Ltd. NSE 102.50 103.12 101.87 103.73 101.23 104.37 100.62 Indian Oil Corporation Ltd. NSE 364.65 371.92 360.47 379.18 356.28 383.37 349.02 Indian Overseas Bank NSE 113.05 115.57 111.27 118.08 109.48 119.87 106.97 Maruti Suzuki India Ltd. NSE 1191.45 1297.02 1106.37 1402.58 1021.28 1487.67 915.72 NSE Index NSE 5418.60 5453.50 5396.45 5488.40 5374.30 5510.55 5339.40 Power Finance Corporation Ltd. NSE 317.65 321.03 314.13 324.42 310.62 327.93 307.23 Power Grid Corporation of India Ltd. NSE 101.00 101.63 100.18 102.27 99.37 103.08 98.73 Praj Industries Ltd. NSE 76.60 78.95 75.20 81.30 73.80 82.70 71.45 Reliance Capital Ltd. NSE 781.75 798.08 772.33 814.42 762.92 823.83 746.58 Reliance Communications Ltd. NSE 188.55 190.50 186.55 192.45 184.55 194.45 182.60 Reliance Industrial InfraStructure Ltd. NSE 888.60 907.00 877.60 925.40 866.60 936.40 848.20 Reliance Industries Ltd. NSE 1053.10 1063.58 1046.43 1074.07 1039.77 1080.73 1029.28 Reliance Natural Resources Ltd. NSE 43.55 44.23 43.13 44.92 42.72 45.33 42.03 Reliance Power Ltd. NSE 172.50 174.18 171.03 175.87 169.57 177.33 167.88 Sintex Industries Ltd. NSE 360.55 366.00 357.05 371.45 353.55 374.95 348.10 Titan Industries Ltd. NSE 2797.20 2816.30 2774.80 2835.40 2752.40 2857.80 2733.30 UCO Bank NSE 91.75 93.38 90.33 95.02 88.92 96.43 87.28    *LTP stands for Last Traded Price as on Monday, July 26, 2010 4:04:17 PM     #1R1   stands for Resistance level 1                         @1S1   stands for Support level 1     #2R2   stands for Resistance level 2                         @2S2   stands for Support level 2     #3R3   stands for Resistance level 3                         @3S3   stands for Support level 3          The levels given above are with respect to previous closing price on the NSE / BSE.  FPO Note http://www.indiabulls.com/securities/mailermis/special-reports/FPO_Note_EIL_July-2010.htm Today Market Update on http://www.indiabulls.com/securities/mailermis/morning-brief/morning-brief-27Jul2010.htm
Corporate News Headline
•	Ultratech Cement has received the nod of the Bombay High Court and Gujarat High Court for the merger of Samruddhi Cement with itself. (BS)
•	SAIL said it will invest Rs. 1 bn to revive its Uttar Pradesh unit, formerly known as Malvika Steel, which the steelmaker acquired last year. (BS)
•	NHPC said that it has commissioned its 120-Mw plant, Sewa II, in Jammu and Kashmir. NHPC has commissioned all the three units of the 120-Mw (40x3Mw) Sewa II hydro-electric project, a company statement said. (BS)
Economic and Political Headline
•	India's mining sector is likely to see a slowdown in growth to 8% this fiscal, even as the overall economy is poised for higher growth, the Prime Minister's Economic Advisory Council has said. The lower forecast comes in the backdrop of an ongoing debate on the virtues of a proposed Mines and Minerals Development and Regulation Act, 2010 - which aims to make mining allocation expeditious and transparent. (BS)
•	Sales of US new homes rose in June more than forecast following an unprecedented collapse the prior month, a signal the worst of the slump triggered by the end of a government tax credit is over. Purchases increased 24% from May to an annual pace of 330,000, figures from the Commerce Department showed in Washington. (Bloomberg)
•	Japan's exports rose faster than economists estimated, sustaining a boost to the recovery that may diminish as global growth cools and the yen strengthens. Shipments abroad advanced 27.7% in June from a year earlier, the Finance Ministry said in Tokyo. Imports advanced 26.1% in June from a year earlier, leaving a trade surplus of USD 7.8 billion, 41.1% higher than the same month in 2009. (Bloomberg)

US and European markets

Index Latest 1D Chg YTD Nasdaq 1890.40 0.80% 1.62% DJIA 10525.43 0.97% 0.93% S&P 500 1115.01 1.12% (0.01)% • US stocks rose, erasing the Dow Jones Industrial Average's 2010 decline, after FedEx Corp. boosted its profit forecast and a report showing improved new- home sales eased concern about the economy. The NASDAQ, Dow Jones and S&P 500 added 0.80%, 0.97% and 1.12%, respectively. FedEx and United Parcel Service Inc., considered harbingers for global growth, gained at least 1.9%. Pulte Group Inc. and Lennar Corp. jumped more than 3.2%. Genzyme Corp. rallied 7.8% to the highest price since February 2009 amid speculation the drugmaker will become the target of a bidding war. Index Latest 1D Chg YTD FTSE 100 5351.12 0.72% (1.14)% CAC 40 3636.18 0.81% (7.63)% • UK stocks climbed to a 10-week high after a government report showed sales of new homes in the US rose more than forecast in June, spurring optimism that the global economic recovery is intact. The FTSE 100 added 38.50 points or 0.72% at 5,351.12. Barclays Plc advanced after the majority of Europe's banks passed stress tests. Pearson Plc surged 5.8% after the owner of the Financial Times newspaper raised its forecast for 2010 and as first-half net income more than tripled. Tullow Oil Plc rose 5.1% following a "major" discovery off Ghana.

Engineers India Ltd. (EIL) will enter the capital market on July 27, 2010 with its follow-on public offer (FPO) of 33,693,660 equity shares of Rs 5 each at a price band of Rs. 270- Rs. 290 per share, with a minimum bid lot of 20 shares. Of the FPO, a total of 712,000 equity shares are reserved for EIL employees and there would be a net offer to the public of 32,981,660 equity shares. The retail investors are offered a discount of 5% on the issue price.

 

Valuation and recommendation:    Click here to view FPO Report.

 

In our view, the price band of Rs. 270-290, which is at a 20% discount to CMP at the lower end offers a good opportunity to enter the stock. We value the stock at Rs. 356 by using the DCF method (WACC: 13.50% and Terminal Growth 5%), which offers an upside of 32 % over the lower end of the price band and 23% over the upper end. As the Company is principally focused on projects in oil and gas exploration, development and production, and transportation projects, it has no immediate listed peer company. However, if we compare it to the other engineering and manufacturing enterprises (BHEL, BEL), we find that the PE for FY10 of 20.47x on the lower band and 21.98x at upper band is quite attractive. Given its strong engineering capabilities & immense experience of executing large projects with robust order book and strong financial base of the company, we recommend investors to subscribe to the issue.

 

Issue closes on July 30, 2010

Buy / Sell (Jul 26, 2010)
	Buy					Sell	Net
FII	2078.24					1881.92	+ 196.32
DII	742.75					1461.62	-718.87

*Disclosure: I don't have any positions in the above said scrips & NIFTY FUTURES.

Disclaimer: "I do not make any warranties, express or implied, as to results to be obtained from using the information in this e-letter.  Investors should obtain individual financial advice based on their own particular circumstances before making any investment decisions based upon information in this report.

--
Arvind Parekh
+ 91 98432 32381